| Show - I 1 k - 10F -- The Salt Lake Tribune Sunday February 26 1989 –: -- - i t ' Yield Curve' Becomes Crystal Ball for enter Naval Officer Candidates Tom Troy International WILMINGTON Del — Most economists don't claim to have a crystal ball they can peer into to see if a recession or depression is on the horizon Award-winnineconomist Richard Stuckey does — or at least the next best thing He calls his the yield curve "I don't have a crystal ball but I have indicators that I follow that have a pretty good record of foreUnited13111 School He returned to the company in November 1956 in 1961 Stuckey earned an MBA from the University of Delaware He became the Du Pont Co's fourth chief economist since 1933 in 1986 succeeding Charles Reeder Stuckey avoids prolonged bouts with flow charts and calculators and devotes only about one fifth of his time to economic forecasting Most of his time is spent meeting with company officials and customers The Du Pont Co with 1988 sales of $33 billion needs economic forecasting to plan its annual budget he said The company's products include industrial and agricultural chemicals fibers petroleum refining and polymers "We're anything but ivory tower white paper generators We re not a speaker's bureau as such but we try to add value to our products" he said Stuckey's forecasting award came with a plaque and a check for $5000 He said he knew his and his staff's 1987 numbers were "superlative" but was surprised to learn his economic forecast was the most accurate for three years The award is based on hard numbers toted up monthly in the financial newsletter Blue Chip Economic Indicators and authenticated by the g casting cyclical change" said du chief economist for ' El Stuckey Pont de Nemours & Co based in Wilcustomers 'Look our tell "I mington at the yield curve It's a good snapshot of the economy'" Stuckey won the 1988 Annual Economic Forecasting Award from Sterling National Bank & Trust Co in New York for having the most accurate forecast for the last three years He said his faithful use of the yield curve — a comparison of short-terand long-terinterest rates (three-mont- h Treasury bills vs Treasury bonds) — helped him and his staff win the award the second one for Du Pont this decade While it's available to anyone who can decipher Ithe fine print in The Wall Street Journal's "Credit Markets" segment Stuckey is a particularly dedicated reader of the yield curve He said in periods of growth longterm rates are higher than short-terrates But in periods of recession the curve'"inverts" — the yields notes rises consistenton short-terly and significantly above the yields on long-tersecurities "I've been a follower of it for a good long time" he said "There has not been a recession since the history of this republic where we have not had a yield inversion" Last year when many economists were stumbling over their pie charts to predict a recession in the wake of the October 1987 stock market crash Stuckey was calmly forecasting merely a period of slower growth "It's become more in vogue the last few months to look at yield curves I didn't hear anybody say they were or were not forecasting a recession a year ago and relate it to the yield curve But I did" Stuckey said Stuckey 57 was born in Roebling NJ He earned his degree in economics and accounting from Pennsylvania State University He joined Du Pont's accounting department in 1953 but left only five weeks later to about Federal Reserve Board Chair School of Business Stuckey's racy rate was 99592 percent the best among Blue Chip's 50 national economic forecasters One thing Stuckey did not foresee was the October 1987 stock market collapse He said he did realize there in the was a "speculative run-up- " and alerted his market in company that 1988 might not be a normal year The result was the company laid out a "a very cautious capital budget and operating budget" He said many economists after the stock market plunge "rushed to change their forecasts" to predict a recession "I was not one who did that" Stuckey said relying on his trusty yield curve "I changed my forecast to one of slower growth" Real gross national product dropped from 5 percent growth in 1987 to about 3 percent growth in 1988 "We've done the same thing for 1989 It isn't preceded by any negative event like the stock market collapse but if you look at that chart the yield curve you can see short term rates are moving up rather dra ' - (''' e swi 0 rrt i: 4 ia ':r f0'i'': up-fro- ce ' oli t4Te:9 rr: i 1414414 It:1 SIP0:4:t11: 4 it 44 44 40 144 0 4OLOA Lir r!!'": wutstamxfo Owner retains the right of rasal "Call me Marty Plunkett: 801-521-447- UNIVERSITY CLUB i tc V s i 1 -- 4f1''''-l04$''4' 4 4 ' "" tr 4 cs -- Ca P' 't 0 - -- - ! 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After 3 N00" tis 1 No lease No obligation ' LET'S TilLIC P1BOLIT As olJanuary we've leased 70606 new square feet of office space in the new University Cub Building Here are our newest tenants: : "My judgment is that inflation and wages are not spiralling up enough to justify that" "If he continues to boost short-o- f term interest rates he increases the chance of recession" Stuckey said Marty Plunkett CON accu- 7 man Alan Greenspan's attempts to halt inflation at its current rate below 5 percent "701606 New Square Feet Prove Were Cutting the Best Deals in Downtown Office Space Right Now" Graduate Columbia University mid-198- he said 1989 Stuckey is edgy into Looking matically" Economic Forecaster Award-Winnin- g i 394-261- 1 II 1 1 1 - |
